A tort is a wrongful act, injury or damage for which the person harmed can seek monetary compensation in civil court.  Medical malpractice occurs when patients are harmed by the error or negligence of health care providers. Physicians and hospitals carry liability insurance to pay malpractice claims. If the parties do not agree on the amount of compensation for an injury, a lawsuit is the traditional American way of settling the dispute.

In theory, the right to sue should ensure that injured patients receive compensation, and the adversarial justice system should ensure that only patients who are harmed by negligence receive compensation.  However, the evidence suggests that the reality is far different.  According to the Harvard Medical Practice Study, the vast majority of all instances of malpractice never lead to a lawsuit; of the suits that are filed, a significant number do not involve malpractice; and juries do not always make the right decisions: Less than 2 percent of patients (or the families of patients) who are negligently injured ever file a malpractice claim; and even fewer are compensated.¹

Nonetheless, malpractice litigation is pervasive.  In fact, most doctors are sued at least once during their career, and one-fourth of physicians are sued annually.² Most malpractice cases are settled out of court, but 10 percent to 20 percent go to trial.³

"Most doctors are sued at least once during their career, and one-fourth of physicians are sued annually."

These outcomes are a result of the incentives of physicians and hospitals, and of patients and attorneys, under the tort liability system.  In theory, the potential financial cost of a tort judgment gives physicians and hospitals an incentive to avoid errors; but in fact community-rated insurance (where physicians in a specialty are generally charged the same premiums regardless of their individual claims record) financially insulates negligent doctors from catastrophic judgments by shifting their claims cost to other physicians. At the same time, the threat of litigation encourages physicians to practice medicine defensively — ordering unnecessary tests and procedures that add to health care costs, even though they do little to reduce errors or improve patient outcomes.  The threat of litigation also discourages physicians and hospitals from disclosing information about potential errors, making it difficult to improve the quality of health care.

To reduce these costs and improve the quality of health care, Congress has made several attempts to pass malpractice reforms without much success.  Many states have proceeded with their own reforms.  Some of these have been successful, while others have had little effect.  There is general agreement, however, that an efficient system of compensating injured patients would 1) compensate every patient (potentially) who is harmed by a medical error; 2) compensate patients fully; 3) minimize the cost of determining compensation; and 4) encourage health care providers and patients to act in ways that reduce the frequency of errors.